Breakout Session #C05

Robert E. Jones, Advisor, Left

Brain Professionals Inc.

Monday, July 28, 2014

4:00 PM – 5:15 PM

Selling Commercial Items in 2014 –

Regulatory & Procedural Updates

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Agenda

• Definition

• Determinations

• Regulatory History

• Recent Changes

• Future

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Takeaway #1

Top 10 resources for selling commercial

items

1.FAR 2.101

2.FAR 12

3.Commercial Item Handbook

4.FASA

5.Clinger-Cohen Act of 1996

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Takeaway #1

6. Defense Standardization Program

7. DFARS 212.5

8. DCAA Audit Guidance – Subcontract

Commercial Items

9. DCAA Memo – FPRA

http://www.dcaa.mil/mmr/11-PSP-017.pdf

10.DAU Commercial Pricing Information

Guide

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Definition of Commercial Item

• FAR 2.101

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Commercial Item Determination

• Market research (FAR 10.001(a)(3)(II))

• Price reasonableness (FAR 15.402,

12.209)

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Cost or Pricing Data

• FAR 15.403-1 Prohibition on obtaining

certified cost or pricing data

• FAR 15.303-3 Requiring data other than

certified cost or pricing data

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Benefits of Selling a Commercial Item

• Simplified acquisition procedures

• Development/NRE costs

• Commercial/industry T&C

• Commercial/industry quality program

• Exemptions

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FAR 12 Simplified Acquisition

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Exemptions

• TINA

• CAS

• Changes must be bi-lateral

• Audits and records

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Government vs Commercial Contracts

• 58 government-unique clauses apply to

DoD acquisitions (DFARS 212.5)

• 50+ government-unique clauses apply to

civilian acquisitions

• Required flow-downs to subcontractors

(FAR 52.244-6)

• IP rights

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Government vs Commercial Contracts

• Termination for Convenience (FAR 49)

• Warranties (FAR 46.7)

• Inspection (FAR 46.1)

• Changes

• Claims & Disputes

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Regulatory Timeline of Events

• 1984 - 2013

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Competition in Contracting Act

• PL 98-369, 1984

• “…promote the use of commercial products

whenever practicable.”

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Defense Procurement Reform Act

• PL 98-525, 1985

• “…standard or commercial

parts…whenever such use is technically

acceptable and cost effective.”

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Blue Ribbon Commission

on Defense Management• 1986

• Foremost among commercial practices is

competition, “which should be used

aggressively in the buying of systems,

products and professional services.”

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Section 800 Panel Report

• PL 101-510, 1990

• Stronger policy language favoring the use

of commercial and nondevelopmental

items

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DFARS 210 and 211

• 1991

• 210 – Nondevelopmental items

• 211 – Early predecessor of commercial

items

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National Performance Review

• 1993

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Federal Acquisition Streamlining Act

• PL 103-355, 1994

• Congress established a preference for

commercial items

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Federal Acquisition Reform Act

• PL 104-106, 1996

• Fair and reasonable price should be

determined by looking at the market, not a

the contractor’s cost.

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Service Acquisition Reform Act

• PL 109-163, 2006

• An exception to the prescribed market-

based approach to defining commercial tha

allows certain products or services to

qualify for “commercial item” status,

regardless of whether they actually were

offered commercially.

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DoD IG Report

• 2006 “Report on Commercial Contracting

for the Acquisition of Defense Systems”

• DOD had ‘‘relinquished the benefits of

buying truly commercial products’’

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GAO Report

• 2006 ‘‘Contract Management: DOD

Vulnerabilities to Contracting Fraud,

Waste, and Abuse,’’

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Acquisition Advisory Panel

• 2007

• https://www.acquisition.gov/comp/aap/24102_GSA.pdf

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NDAA 2007

• PL 109-364, 2006

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Takeaway #2

• Know your products and services!

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Recent Changes

• DCAA Memo September 2011

• DFARS Update

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DFARS Update

• DFARS 212.102, 2012

• FAR 12 acquisitions exceeding $1 million in value, except

for acquisitions made pursuant to FAR 12.102(f)(1), the

contracting officer shall—

• Obtain approval at one level above the contracting officer

when a commercial item determination relies on

subsections of the “commercial item” definition at FAR

2.101 :

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DFARS Update

• (1)(ii) Has been offered for sale, lease, or

license to the general public;

• (3) Modifications

• (4) Combinations of items, or

• (6) Services.

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NDAA 2013 Proposal

• Eliminate items ‘‘of a type’’

• Eliminate items or services merely offered

for sale, lease, or license (but not yet sold,

leased, or licensed)

• Adjust the threshold that requires prior sale

of ‘‘substantial’’ quantities to one that

allows prior sale of ‘‘like’’ quantities

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Takeaway #3

• Do your research and stand strong!

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Disputes and Claims

• FAR 33 Disputes and Appeals

• False Statements Act

• 18 USC §1001

• Civil False Claims Act

• 31 USC §3729

• Contract Disputes Act

• 41 USC §601-613

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Future of Commercial Items

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3 Takeaways

• Top 10 resources for selling commercial

items.

• Know your products and services!

• Do your research and stand strong!

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Questions

Robert E. Jones

robert@leftbrainpro.com

(513) 728-1163

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